Liberty Global is in talks with the mobile operator Sunrise regarding a joint venture, reported Bloomberg, citing people with knowledge of the matter. Discussions may lead to a joint venture with Liberty unit UPC Switzerland. Talks are at an early stage and an agreement is not certain.
The discussions could pave the way for a joint venture between Liberty's UPC unit and Zurich-based Sunrise, which has a market value of about CHF 4 billion. The combined business could mirror the deal that billionaire John Malone engineered in 2016 for Liberty Global with Vodafone Group in the Netherlands, the people said.
The companies are working with advisers as they evaluate strategic options, the people said. The two sides may not reach an agreement, they said.
Sunrise shares fell by the most in more than a year following the Bloomberg report, reflecting investors’ disappointment that Liberty is not discussing an outright acquisition of Sunrise.
A representative for London-based Liberty Global declined to comment. Sunrise did not respond to an e-mail or call, said Bloomberg.
The stock "was partly supported by hopes/expectations" that UPC or Liberty would launch a full takeover bid, according to Panagiotis Spiliopoulos, an analyst at Vontobel. A joint venture is difficult to value, as it has no clue about the structure of the deal, among other matters, he said.
Shares in Sunrise closed at CHF 84.90 on 20 March compared with CHF 90.70 on 19 March. The move erased this year's gains, leaving it at a 3.8 percent decline so far in 2018.
Liberty Global and Vodafone agreed in 2016 to combine their Dutch businesses to create a provider of internet, TV and mobile services. The two firms have in recent weeks also held talks about some of their other operations in continental Europe, which could result in redrawing their spheres of influence in the region.
In February, Liberty's CEO Mike Fries signalled his firm's appetite for becoming "a larger player" in Switzerland. The company also said in December 2017 that it plans to use the proceeds from the sale of its Austrian cable division to Deutsche Telekom for EUR 1.9 billion to reduce debt in its remaining UPC business unit, which includes Switzerland, Austria and Central Europe.
Meanwhile, Sunrise wants to accelerate growth by targeting internet and TV customers without using acquisitions, CEO Olaf Swantee said in an interview in November 2016. The company agreed in May 2017 to sell its phone towers in its home market to investors led by Cellnex Telecom for about CHF 500 million, and said it would use some of the proceeds to pay down debt in an effort to improve its credit ratings. It has also been investing in its mobile network to boost customer-service quality.
